• Key w/w moves: Cotton -3%; ICE cotton contract -9%; Polyester -2%; HW DWP 0%; China-origin 0%, medium-grade VSF -3%; and high-end VSF -4% and Lyocell 0%. Cotton is now trading at a 2% discount to VSF (2021 average premium: 30%) and a 69% premium to polyester (2021 average: 150%). The VSF premium to polyester is currently 72% (2021 average: 94%) and the lyocell premium to VSF is currently 27%.
  • VSF prices track cotton and under further pressure: Large-scale VSF plants obtained large orders by slashing offers. VSF op. rate improved to 68% (from 66%) as a VSF plant in North China further raised run rates. VSF inventory days stable at 27.0 (from 27.0). The theoretical VSF margin for Chinese producers is further in the red at -USD 278/t. The VSF/DWP spread was down 7% w/w (-20% YTD).
  • Lyocell market was stable to weaker this week: The operating rate of lyocell industry improved to 52% (from 47%). Sateri (Changzhou) was ready for the start-up of new unit, Jiangsu Kinyonta and Shandong Hongtaiding partially resumed operation output in Changzhou, Peixian and Xiajin was increasing
  • DP prices stable w/w but spot prices dropped today: The spot hardwood price is down to USD 1,000/t and the DWP/pulp spread is currently USD 155/t (this level generally supports preference for paper pulp production over DP production). Domestic DP price stable w/w at RMB 8,500/t (USD 1,168/t, a USD 148/t premium to imports). DP Chinese output remained at zero as Hunan Juntai was temporarily producing paper pulp after coming back on stream from routine maintenance last week. Limited DP stocks were still available for sale. With VSF under further pressure, DP prices are likely to moderate further.

Download Insights